Mills cites the example of OnDeck

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There are a number of factors that likely contribute to this gap Mills says and it s where she s focusing some of her early attention. For the bankers there s the cost of making the loan the fact that we have fewer banks now than we did before and the toll that the recession took on the creditworthiness and personal assets such as real estate used for collateral of would be small business borrowers Mills says.

The bankers say they can t find creditworthy borrowers and the borrowers talk about having to go to bank after bank before they find one that will make them a loan. With a white paper on this in the works Mills and her colleagues believe the most promising solutions may actually come not from the banks or the government but from small businesses—namely a growing Chinese Overseas America Number Data swath of high tech startups. Technology can change the game Mills says. We have potentially a new competitive landscape. Small innovative entrepreneurial companies are popping up everywhere to address the small business credit market.  Capital a New York web based company that has issued more than billion to more than businesses since its launch. Rather than depend on credit scores the company uses its own algorithm to analyze data including bank transactions sales and customer reviews. Potential borrowers fill out applications online automatic decisions are made in a matter of minutes and loans are issued in as soon as one day. OnDeck has received some million in venture funding.





The startup lending industry is exciting for a couple of reasons Mills says. One these companies can provide online markets that might make it easier for borrowers and lenders to find each other. Two they re taking advantage of data to help them better assess risk and make more accurate lending decisions. One of the reasons that lending to small businesses is so costly is that it s very difficult to assess credit risk Mills says. Technology is providing the opportunity to think differently about how we approach small business lending and the ones who crack the code may actually end up having an edge in a market that is vitally critical to our nation s economic growth and competitiveness.